Resource Management Act reform unlikely to be silver bullet for cheaper houses

Wednesday, 24 July 2019

The Resource Management Act has been blamed for allowing a lot of opportunities for people to object to new developments.

Reform of the Resource Management Act could eventually help boost New Zealand's supply of housing, but anyone expecting it to be the full solution is likely to be disappointed, economists say.

The Government has launched an overhaul of the act, looking to cut complexity and costs and better enable urban development.

It says the reform will look to increase affordable housing development and radically reduce complexity, while also increasing freshwater quality and fighting climate change.

The Government will soon pass an immediate bill fixing several issues in the act, while also undertaking a wide-ranging review of the entire law, due to deliver by June 2020.

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The act is the country's primary planning legislation and covers everything from district plans to building consent regulations and use of natural resources.

But it's often blamed for holding up new building work because it allows many opportunities for opposition to new development.

A lack of housing supply is often cited as a reason for soaring house prices in parts of the country in recent years.

Kiwibank chief economist Jarrod Kerr estimates that, if the situation continued as it is, New Zealand would be short 150,000 affordable homes by this time next year, most of them in Auckland.

Economist Shamubeel Eaqub said the reform would not mean any change in the immediate future.

Eventually it should help to release land, increase density and take away inconsistencies between local councils.

But it would not be the full solution.

'Even if you fix the Resource Management Act, if you don't have money to build infrastructure, you'll run into problems. People put it as the evil [holding back housing development] but there are many different things.'

The last Government offered special housing areas as a way to get around what then-Housing Minister Nick Smith called a 'convoluted' Resource Management Act. But the lack of success with those showed it was not just the act to blame, Eaqub said.

'The entire system doesn't quite work.'

Any changes had to be co-ordinated, he said. 'The Resource Management Act is one part, as it has always been. If it comes with steps to allow easier supply of infrastructure ready land, it will help reduce house prices over time. The noises are good, proof in the pudding.'

Brad Olsen, an economist at Infometrics, was more optimistic.

He said the interim law change, reducing the complexity of the legislation, could unlock more development.

In the longer term, the review of the law and how it operates with other legislation would be important to unpick overly complex, costly and unhelpful red tape, he said.

'The idea of splitting off different parts of the act makes a lot of sense: on the affordable housing side of the story, the act is the framework through which land use is decided, with zoning and district plans, among other things, creating complexity in sourcing land for development and different uses. However, the other story is around environmental resource protection, with water quality, resource extraction all also falling under the act.'

It would be better to have more specific functions for different parts of the law, he said. 'Should water bottling, subdivisions, noise levels and fence height all sit within the same set of laws?

'My overall view is that the act is in severe need of an overhaul and this first step by the government is positive.

'But a lack of understanding of what the act does, and what additional costs it imposes, will mean that the act remains too cumbersome to benefit anyone. A more streamlined approach, and practical-based, law will likely provide the best outcomes for all different sectors, and certainly will reduce confusion, time3wasting, and cost.'